Paper millionaires - more fronting news

johannesburg - alison bhengu and goodman mthethwa are directors of a company that received a r1m tender from the ethekwini metro council. that makes them millionaires, at least on paper.
the reality is different, according to a forensic audit done by gobodo into the practice of black economic empowerment firms fronting for bigger groups.

the two men are employees of their supposed partner and were paid r15 to r20 for each square metre of work they did on the ushaka marine island site. they were not even aware they were directors who could decide how much to pay themselves.

these details are contained in a report of the forensic investigators into alleged corruption at the r700m ushaka marine island.

several companies working on the project allegedly fronted with their employees to win lucrative tenders.

according to documents filed for the tender by lan hopkins, owner of durban tiling/ikhwezi tiling jv, mthethwa and bhengu are directors. they both, however, claim to have had no input in the management of the contract and were not aware of the amounts received by the "joint venture".

the primary objective of gobodo's investigation was to ascertain whether the true goals of the empowerment policies of the ethekwini municipality had been achieved during implementation of the ushaka island marine park project.

the investigation also wanted to find out if the municipality's bee policy had been compromised.

the five companies implicated for allegedly entering into joint ventures with black companies (including durban tiling/ikhwezi tiling jv) are mvelo construction jv, storn/isichotho, comelec 80/20 electronics jv, infra projects/mswazandile construction jv and ukhozi construction.

"the durban tiling/ikhwezi tiling jv was awarded a contract to perform tiling work worth r1 687 270. to date they have been paid r2 306 432.29," the report said.

the report also stated there are strong indications that 80/20 is a front for comelec in the comelec 80/20 jv. the two share business premises and otto ncanana, an empowerment partner, draws a monthly salary of r3 000.

comelec 80/20 is an electronics company that received almost r3.5m for installing electronic devices, including smoke detectors, access control and a closed-circuit tv system.

in the case of the infra projects/mswazandile jv the report claims that nick singh of infra used the name and equity holdings in mswazandile without the knowledge and consent of sandile nyovane, owner of mswazandile to create a "priority population group" partner in the so-called joint venture.

"mswazandile was subcontracted to grinaker-lta and has received a paltry r29 000 out of a total contract of r5.6m," the report said.

the report recommends that criminal and fraud charges be laid against all companies implicated if they fail to provide audited accounts of the distinction of funds received from ushaka marine island.